Mustek’s earnings nearly tripled in the year to end-June 2026, but the JSE-listed technology distributor made less gross profit from selling its products than it did a year earlier, and the cash generated by its operations fell by more than 80%.
Headline earnings per share – the JSE’s main profit measure, which strips out once-off and capital items such as impairments and asset disposals – rose 181% to 204.6c, according to annual financial statements approved by the board on Wednesday.
Revenue edged up by just 1% to R7.26-billion, while profit attributable to shareholders climbed to R107.6-million from R38.8-million. The board declared a final dividend of 37.5c/share, up from 13.75c.
Heavy lifting
The question is where the improvement came from. Gross profit fell 3.4% to R924.9-million as the gross margin slipped to 12.7% from 13.3%. Three lines further down the income statement did the heavy lifting:
- Finance costs fell by a third to R101.8-million, from R154.1-million;
- Foreign exchange gains jumped to R52.6-million from R10-million; and
- Mustek’s share of profit from its associate companies quadrupled to R25.7-million.
Together, those three items improved by R114.4-million year on year – more than the R95.4-million increase in pre-tax profit. Stripped of currency gains, operating profit fell 6% to R159.8-million.
Mustek has not hidden this. In a trading statement ahead of the results, it attributed the jump in earnings mainly to “a material reduction in finance costs and more favourable foreign exchange”, supported by cost control and better contributions from associates.
The lower interest bill is the payoff from last year’s balance-sheet clean-up, when Mustek cut inventory by R607-million and used the cash to repay R594-million of its bank overdraft.
That process has now gone into reverse. Cash generated from operations collapsed to R115.8-million from R687.4-million. Inventory absorbed R176.4-million of cash and Mustek paid down R265.5-million of trade and other payables, partly offset by R146.1-million collected from customers. After interest, tax and dividends, operating activities produced just R7.7-million, against R529.7-million a year earlier. Cash on hand fell to R206.2-million from R225.7-million.
The new dividend will cost about R20-million, more than the R15.6-million Mustek’s operations generated after interest and tax. The group has refinanced its working capital lines, though: in July it reached financial close on a R1.1-billion syndicated trade finance facility led by Absa, with RMB as co-lender, which replaces its previous trade finance facilities. It chose not to renew its overdraft.
Some of the stock on the shelves is also ageing. Mustek’s allowance for obsolete inventory rose 52% to R119.3-million, and the value of stock written down to its expected selling price nearly doubled to R86.9-million from R46.8-million. Auditor BDO singled out the obsolescence allowance as the key audit matter, noting that the group’s products are continually replaced by newer models. BDO accepted management’s explanations for the write-downs it tested.
Distribution, which accounts for 98% of group revenue, leant heavily on sales to dealers. Hardware sales through that channel rose 7.5% to R4.9-billion, masking declines elsewhere. Public sector hardware sales fell 5.2% to R1.39-billion, retail fell 6.8% to R392.7-million and exports dropped 43% to R233-million. Overall hardware revenue rose less than 1% to R6.92-billion.
Mustek’s smaller businesses went backwards. Revenue at training arm Mecer Inter-Ed fell 20% to R72.2-million, and profit in the training segment slumped to R1.5-million from R17.6-million. Managed cybersecurity revenue from Cyberantix, in which Mustek holds 70%, rose 75% to R54-million, but profit in the services and support segment slipped to R1.9-million from R2.9-million. That segment also houses Business AI, a start-up in which Mustek took a 51% stake in August 2025 and which made an operating loss in its first year.
The standout contributor was an associate. Yangtze Optics Africa, a fibre-optics business in which Mustek holds 25.1%, grew revenue by 27% to R476-million, and its pre-tax profit nearly quadrupled to R100.5-million from R26.6-million.
Headcount
Headcount fell 9% to 1 009 from 1 112, almost all of it in distribution, though employee costs were flat at R508.9-million. Pay for the three executive directors rose 13% to R19.1-million after they were paid bonuses of R3.9-million, having received none in FY2025. CEO Hein Engelbrecht earned R8.3-million.
Novus Holdings, which held 50.4% of Mustek at year-end, told the company on 25 September that its stake had risen to 57.63%. Its mandatory offer to minority shareholders, which Novus has agreed to raise to R15.41/share from R13 after the Takeover Regulation Panel ruled that Numus Capital was a Novus concert party, still cannot be implemented. A settlement reached in May has yet to be made an order of the Takeover Special Committee, and Novus has not received a compliance certificate from the panel. — (c) 2026 NewsCentral Media
